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Los Angeles residents would see water and power rate increases of 2.4% to 5.4% every year for five years in order to replace aging infrastructure, meet conservation mandates and upgrade customer service under a plan announced Wednesday by the Los Angeles Department of Water and Power.

The rate increase plan, which must be approved by the Los Angeles City Council, would hit heavy water users harder than residents who use less water, part of a larger water conservation strategy amid California's drought.

The plan will also expand the department’s water rate structure from two tiers to four.

 

 

Typical residential customers will see an average increase of about 3.4%, or $4.75 per month on their bill each year for five years, officials said. Low-use customers will have  a combined bill increase of 2.4% on average per year, or about $1.95 per month. High-use customers will pay about 5.4% more, or $17.64 per month each year for five years.

Low-use and typical residential utility customers make up about 75% of the DWP’s customer base, while high-use residential customers make up the top 10%.

 

 

Speaking to reporters Wednesday morning, DWP General Manager Marcie Edwards noted that power and water agencies across the state have steadily increased rates to pay for infrastructure replacement and regulatory  mandates. Even with the proposed increases, L.A. customers would enjoy lower water rates than Santa Barbara, San Francisco, Beverly Hills and San Diego, among others, officials said.

Following Wednesday’s release, the plan will now undergo a period of public review for 120 days, during which it will likely meet intense scrutiny from ratepayer advocates who say the agency has lost the public’s trust in recent years. DWP officials said they would work hard to explain the need for the rate increases.

“I think you rebuild trust by being the low-cost provider and providing reliable service,” Edwards said. “I think this rate plan does that,” Edwards said.

 

 

DWP officials say that power revenue will need to increase from $3.5 billion to $4.4 billion over the next five years. Three quarters of that money is needed to meet government mandates on greenhouse gas reduction, expansion of renewable energy sources and the rebuilding of coastal power plants to eliminate ocean water cooling.

The department said it also needs $230 million in water revenue, 85% of which will support infrastructure repair as well as compliance with water quality regulations. Additional funds will also support efforts to decrease reliance on imported water.

 

 

The call for a rate increase follows a slew of missteps by the nation's largest municipal utility that its critics and city officials say have shaken the public’s trust. 

Last month, a DWP audio-visual technician was charged with misappropriating more than $4 million in public funds. 

Six weeks before that, City Controller Ron Galperin released a long-awaited audit showing that two nonprofits created by the DWP and financed with more than $40 million from ratepayers had paid millions to vendors without competitive bids, overpaid top managers and let them charge purchases to nonprofit-issued credit cards without spending limits or the need to file expense reports. 

The department also recently spent $178 million on a computer system that failed to send bills to many customers for months, and then sent ones that sharply inflated the actual amount of water and electricity used. 

And last year, a massive water main break on Sunset Boulevard, which flooded portions of the UCLA campus, caused millions of dollars in damage and became a vivid symbol of the agency's crumbling infrastructure. 

That crumbling infrastructure is part of the reason the department says it needs to increase rates. 

Mayor Eric Garcetti pledged not to hike utility rates in 2014, saying the DWP needed to first rebuild trust with its customers. “Like the average ratepayer, I will have to be shown the case,” he said earlier this year. 

In May, the Board of Water and Power Commissioners ordered up Wednesday’s plan examining how DWP could generate millions of dollars in new revenue. The analysis presented then estimated that the department will need $270 million in additional revenue in each of the next five years. 

“Our office will review DWP's revenue proposals … to address those needs.”

DWP officials have stressed that there have been no base rate increases for water since a one-time 3.1% hike in 2009. The last base rate increase for power came in 2012, when an 11% increase was spread over two yearsSource:  latimes.com

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